Tax day comes sooner than expected for many taxpayers that have been procrastinating. One thing that should not slow them down is receiving their tax form from the employer that paid them.
Under federal tax regulations, employers and companies that use the services of independent contractors must upload tax information to the IRS no later than January 31 of each year. Employees will receive a W-2 form, while independent contractors are each sent a 1099. The employer can use Business Services Online to submit the information to the IRS. They could then send an electronic or paper copy to the employee or an independent contractor.
It is essential that businesses prepare early to meet these deadlines. The IRS can assess a penalty on the employer when they do not submit the tax forms in time. The IRS can penalize a business $50 for each W-2 form that is filed late. Businesses can pay a maximum of $585,000 in fines ($206,000 for a small business). For forms that are more than 30 days late (through August 1), the penalty rises to $110 per form. The penalty can be even steeper when the company intentionally disregarded the filing deadline or filed incorrect payee forms.
Depending on the number of employees that the business has, the fine can be substantial. Businesses should prepare for the deadline well in advance so they are not left to scramble at the last minute. Preferably, they should test their own procedures and systems well before the deadline to iron out any problems.
Contact a San Francisco Tax Attorney
San Francisco Tax Counsel works with individuals and small businesses on tax issues throughout the year. To speak to an experienced tax lawyer, you can send us a message online or call us today at